[2025 Audit] National Pension Service Chairman: "We Need to Reconsider Domestic Equity Allocation"

Fund Depletion and Peak Shift Due to Higher Contribution Rate
Hints at Reducing Domestic Equity Allocation

Kim Taehyun, Chairman of the National Pension Service, stated that changes in the projected depletion period of the pension fund should also be reflected in investment strategy. This suggests a possible shift in the allocation to domestic equities.

On October 24, during a National Assembly Health and Welfare Committee audit held at the National Pension Service headquarters in Jeonju, North Jeolla Province, Chairman Kim remarked, "I believe it is time to reconsider the allocation to domestic equities," adding, "With the recent increase in the contribution rate, the timing of fund depletion and its peak have changed significantly."

He continued, "Going forward, we need to take a comprehensive approach to potential changes in corporate governance and economic growth rates in the domestic stock market when considering adjustments to the domestic equity allocation," and added, "Even if the proportion decreases, the absolute investment amount could still rise, and this should also be factored into decision-making."

Previously, Assemblyman Ahn pointed out, "Compared to other overseas pension funds, the National Pension Service has a very high proportion of domestic equities," and emphasized, "Since the fund’s role is to enhance returns, diversification is necessary. If the National Pension Service continues to invest heavily in domestic stocks, it could create problems in the future."

The concern is that if the National Pension Service maintains a high allocation to domestic equities, large-scale asset sales to pay out future benefits could lead to a sharp decline in the domestic stock market.

Meanwhile, the National Pension Service plans to gradually reduce its domestic equity allocation over the mid- to long-term. Until 2017, the share of domestic equities (21.2%) was higher than that of overseas equities (17.4%), but this trend reversed starting the following year. According to the mid-term asset allocation plan, the proportion of domestic equities will be reduced to 13% by 2029, while the allocation to overseas equities will be increased to 42%.

Yonhap News Agency